Middle East: The Israeli Finance Minister, Mr Benjamin Netanyahu, has lifted his threat to resign over the refusal by the Prime Minister, Mr Ariel Sharon, to put a Gaza pullout plan to a national referendum.
"The Finance Minister told the Prime Minister he is remaining in his post," said a spokesman for Mr Netanyahu, Mr Sharon's strongest rival in the right-wing Likud party.
Mr Netanyahu, credited internationally with putting Israel's recession-hit economy back on track with spending cuts and free-market reforms, had vowed to quit unless Mr Sharon agreed by yesterday to a national ballot on removing settlements from Gaza.
In comments reported by Israel Radio, Mr Netanyahu said the death of Mr Yasser Arafat would create a "new reality" that could open the way for negotiations with the Palestinians on what has been a unilateral plan to quit Gaza and the northern West Bank.
"In this new situation, I decided to stay in the government," the radio quoted him as telling Mr Sharon in a meeting at the Prime Minister's office.
Investors had feared economic uncertainty, a halt to the reforms and a delay in passing the 2005 state budget in the event of Mr Netanyahu making good on his threat.
"There will likely be a battle for [ Palestinian] succession, and in this case we should wait patiently for the results of this struggle," the radio quoted Mr Netanyahu as telling Mr Sharon.
"A Palestinian leadership could be created that we can negotiate with and in that case we must have dialogue with them," Mr Netanyahu, a former prime minister, said.
Meanwhile, Israel's pro-settler National Religious Party (NRP) pulled out of Mr Sharon's government over the Gaza plan. The Welfare Minister, Mr Zevulun Orlev of the NRP, handed in his letter of resignation to take effect today.
The move, announced earlier at a news conference, was unlikely to lead to the immediate collapse of the government, which lost its parliamentary majority in June when two other religious lawmakers resigned over the planned unilateral pullout. - (Reuters)